Most people would agree that most, if not all, technological innovation is a benefit to our society. Fintech has been in the news a lot lately and can be defined as the broad term that describes the technological advances that impact banking and financial services. Fintech allows for your online banking, deposing a check from your phone, and sending money through a payment app.

Over the past years, fintech has increasingly entered the loan arena – especially small business loans and SBA loans. If you perform a quick Google search for small business loans it is easy to see how many fintech companies offer this service. Overall, fintech has made it easier and quicker to access capital that a small business needs to grow. But are there any negatives of this fintech lending revolution?

Earlier this summer, The US House of Representatives Committee on Small Business held a hearing about fintech and the transparency in lending. The testimony and information from the hearing did paint a picture that, overall, fintech does help businesses access capital and fintech has helped drive great innovation in banks and financial services companies. The caveat from these hearings is that the growth of fintech small business lending has made it harder from the small business owner to compare loan offers due to the lack of uniformity. Additionally, the automated underwriting used by many fintech lenders has a harder time seeing the “complete picture” of a borrower’s situation.

Here at PyraMax Bank we believe that technology is a good thing and we have made investments in technology to better serve our customers more accurately and more quickly while maintaining customer security. We also believe that automated underwriting does not capture all the intricacies of a small business. And finally, we believe in being as transparent as possible when offering loan terms. Fintech small business lending has made it a quick transaction to obtain a loan. We believe that fintech has allowed us to service the relationship we have with our customers at time of loan origination and for the life of the banking relationship. Simply put, as a community bank, we get to know your business not just for a loan transaction but for a banking relationship.

If you would like to read more about the Committee on Small Business Fintech hearing click here. 

By Andrew Freter, Vice President Commercial Relationship Manager at PyraMax Bank.